Guest Post: Philips Healthcare’s Trick or Treat

If you have not been scared enough by Halloween, read this consent decree announcement made by the FDA on November 1 to Philips Healthcare concerning quality control issues with their automatic external defibrillator. Philips had “tricked” industry by consistently providing unsafe defibrillators so the FDA “treated” them to a cease and desist order through a mandate from a federal judge. Under this consent decree, Philips must cease manufacturing until corrective action is taken.

About the author: Michelle Lott, founder and principal of Lean RAQA Systems, started the company with an acute awareness of the unnecessary complexity prevalent in regulatory and quality functions throughout the healthcare product industry. Lean RAQA Systems is dedicated to helping healthcare product companies navigate a complex regulatory landscape with the simplest solutions possible to ensure both regulatory and business success.

This is scary, not just because the products are life-saving equipment, but also because Philips is one of the biggest (and most trusted) companies in the healthcare sector. The corrective actions that Philips must take include hiring an independent third-party cGMP expert to inspect their Emergency Care and Resuscitation department to ensure compliance with the Quality System regulations. But most importantly, the question is how will Philips rebuild trust as a provider of safe and effective medical devices?

According to the report “Research Reveals Key Insights For Driving Medtech Growth In The Face Of Healthcare Reform” from Partners & Simons:


“Trust has become the new currency in accountable care.”

“Trust […] has been shown to correlate directly with business performance […].”


More than any other factor driving revenue, medical device companies need to gain trust to realize growth in a value-driven healthcare world. If trust is the new currency, then certainly Philips egregious actions resulting in patient injury and death constitute a major violation of that trust and they are going to lose currency. This violation will significantly impact their perceived value to healthcare providers and in turn impact their revenue.

 So, in the midst of Philips’ nightmare, it is a good time to reflect and ask yourself:


“How can my company build and maintain trust?”


Providing safe and effective products is just one small piece in building a trusted brand. Companies must also have a reputation of quality and become collaborative partners with providers and patients. Improving your regulatory and quality programs will grow your brand as a trusted medical device company. 


Many companies struggle with negative paradigms towards quality such as:


“Quality is a necessary evil.”

“Quality department is like the police.”


These paradigms make successful, lasting remediation difficult and must be corrected in and of themselves for sustainable results. Any time an issue with the FDA has escalated to a Warning Letter followed by a Consent Decree from a federal judge, something has fundamentally broken down – not just in their quality systems but in the organizational culture toward quality.


Integrating positive paradigms towards quality improves business strategy, product quality, and the efficiency of day-to-day operations. Paradigms such as:

“Quality is value-add.”

“Quality department is my strategic partner.”

drive organization excellence and trust in your company’s brand.


In Philips’ case, not only does the FDA issues need expeditious resolution, but the approach to remediation needs to go beyond just repairing quality system deficiencies to address underlying business systems and company culture. Remediating paradigms around quality is critical to get at the root cause of their quality problems.


Some organizational analysis tools can measure the negative impacts of a Warning Letter or a Consent Decree such as organizational stress, risk of attrition, and a multitude of other organizational dynamics. By using such tools, Philips’ executive management could be empowered with information to know when, where, and with whom to intervene so a healthy organizational dynamic towards quality can be restored. Using these applied organizational and intervention tools, recurrences at Philips could be minimized, and a solid foundation could be formed for lasting success.  Only then can the company rebuild a reputation for quality and improve their positioning as a trusted brand, which is key in today’s value-driven healthcare industry.

Posted in AZBio News.